Adam Smith and
the Buddha
Ronald Wintrobe
Western University
Buddhism and Economics
• “Adam Smith” means both Adam Smith
and sometimes is also a shorthand for
modern economics
• “The Buddha” is a name for Buddhism in
general but also sometimes specifically
contemporary Zen Buddhism. Zen
Buddhism is often thought to be the
“purest” form of Buddhism.
Structure
• Part 1 (The Buddha): interprets Buddhism in terms of
rational choice, and tries to show that it has a useful
message for economic theory
• I focus on those aspects of Buddhism which can be
related to economics and illuminate it.
• It follows that I am leaving a lot out!
• In particular, religious aspects of Buddhism are not in
• Part 2: (Smith): economics can be useful for
understanding Buddhism.
Previous work by economists
There is not much of it:
• Chapter 2 of Schumacher’s Small Is Beautiful
(1973)
• Serge Christophe Kolm’s Le Bonheur Liberte
Frederic Pryor’s 2 articles (1990, 1991) “A
Buddhist economy: In principle and In practice
• That is the entire economics literature that I
know about. But they have definitely influenced
me, especially the idea of “The Middle Way”
Other literature
Suzuki and others assert that Zen is incompatible
with reason.
But many classical Buddhist masters take the
rational point of view eg the Japanese masters
Dogen (13thc) and Hakuin (17th c) .
So do modern scholars like:
• G. Sorgen Victor Hori, (Religious Studies)
• Stephen Heine, Toshihuro Isutzu, Steven Katz
(Philosophy)
• Preston (Sociology}
• Schnitke (Architecture)
What might the Buddha say to Adam
Smith?
• Buddhism is like economics!
• The Buddhist point of view is the same as
the economic one in that it takes as its
central question the key to human
happiness, or rather, the relief of human
suffering.
• Buddhism is individualistic, like economics
• And Buddhism, like economics, is empirical:
you are the judge of whether it works or not
Buddhism is NOT like economics
•
In Buddhism, desires or “cravings” for goods and
services are just like addictions. Buying more goods
and services does little or nothing to reduce the
cravings. The only way to reduce suffering is to
reduce the cravings themselves.
• How do you extinguish desire? The key is to lose
yourself. Desires are illusory because the self is illusory.
This is the Buddhist doctrine of Anatman—the self
does not really exist….really that it is impermanent and
fleeting..
Nothing from something:
Times Square, if you look long enough
Atta Kim, Times Square, New York City (8 hour exposure) from
the exhibition “Grains of Emptiness” at the Rubin museum, NYC
Something from nothing
• A cup In a vacuum might look empty, but it turns
out to contain “something” (particles—but they are
themselves empty)
• The universe is Something from Nothing in
quantum physics: Virtual particles are subatomic
particles that
form out of nothing for extremely short periods
of time and then disappear again
• So it looks like the world is “Neither a something
nor a nothing either” (Wittgenstein)
Everything
• Computer simulation of the so- called “Cosmic Web”
(the known universe)
“What did the Dalai Lama say to the
hot dog vendor?”
• “Make me ONE with everything!”
• A little crude, but, essentially, this is the goal of
Buddhism.
• But, you can’t get to nirvana by eating hot dogs. And
there is a highly specific and ritualized program for
getting there….
• But it is easy to think of ways in which people
approach this state of mind in their daily life. One way
is identification with an activity.
Robert M. Pirsig’s classic Zen and The
Art of Motorcycle Maintenance:
What I’m talking about here in motorcycle
maintenance is “just fixing”, in which the idea of a
duality of self and object doesn’t dominate one’s
consciousness. When one isn’t dominated by
feelings of separateness from what he’s working
on, then one can be said to “care” about what he’s
doing. That is what caring really is, a feeling of
identification with what one’s doing. When one
has this feeling then he also sees the inverse side
of caring, Quality itself (381-2).
Kensho = to become one with
• a writer will become completely immersed or “lose
herself” (or himself) in the book she is writing.
• A reader can also feel that he “loses himself” in reading
a book.
• This “disappearing” was the goal Jeff Bezos says his
company, Amazon, had in designing the screen of the
kindle e- reader.
• People go to the beach with their kids on a beautiful
day, feel the sun, look at the beach and the beautiful
water, and take photos of everything with their
cellphone. If they were happy that day, they might say
they felt completely together with their family and with
the sun and the water.
You can also be one with others
• The eighth century poet Santideva, in the
course of celebrating the ‘perfection of
meditation’ urged the practice of
contemplative identification with other
beings.
•
“Primarily one should zealously cultivate
the equality of self and other. …. All sorrows,
without distinction, are ownerless…..Whoever
wishes to quickly rescue himself and another,
should practice the supreme mystery: The
exchanging of self and other”
An economics definition of “oneness”
from Becker
• A person’s “social income” is the sum of
personal income plus the value to him or her of
the “relevant characteristics of others (R).“
• Suppose that R = Ij where Ij = the income of
n
some other family member
j whom the head
cares about.
• If it is costless to make transfers within the
family, the head’s social income is just
• Sij = Iij = Ii + Ij
• The head’s social income is just “the family’s
income” – the sum of his own income plus the
income of the other family members whom he
cares about.
• If the head could take an action that would raise
his own income (Ii) by some amount b, but lower
that of another family member (Ij) by more than
that, c, he would not take that action, because it
would lower his own (social) income (Iij). Thus,
the family is a solidary unit, that is, the family is
one.
• One can also be one with the environment
Mindfulness
• A man traveling across a field encountered a tiger.
He fled, the tiger after him. Coming to a precipice,
he caught hold of the root of a wild vine and swung
himself down over the edge. The tiger sniffed at him
from above.
• Trembling, the man looked down to where, far
below, another tiger was waiting to eat him. Only
the vine sustained him.
• Two mice, one white and one black, little by little
started to gnaw away the vine.
• The man saw a luscious strawberry near him.
Grasping the vine with one hand, he plucked the
strawberry with the other. How sweet it tasted!
But there is more to it…No mind
“One cannot become water because one is observing it
from the outside. that is to say, because the ego is, as an
outsider, looking at the water as an “object”
Instead….one must first learn to ‘forget one’s ego subject’
and let oneself be completely absorbed into the water.
One would then be flowing as the flowing river. No more
would there be any consciousness of the ego.
Nor would there be any consciousness of the water.
Strictly speaking, it is not even the case that one
becomes the water and flows on as the water.
The water flows on. No more, no less.” (Izutsu)
Mindfulness is not enough; 3 things
are necessary for No mind
(1) Mindfulness:
Focus on the present moment;
different from Economics with its
emphasis on accumulation
(2) Be one with your environment
(3) Be in the right “place” i.e.,
Have a harmonious and wise
Relationship to the environment. (You can feel
“one” with the environment if
you are drowning….)
Implications for economic theory
1. Suppose that, for many people, their happiest moments
are those when they follow the Buddhist approach
(perhaps without being conscious of the idea that it is
Buddhist at all!)
And lose rather than gratify themselves,
when they are conscious of nothing,
when they are “one” with an activity
or people they love
or a group (family, firm, army, nation)
or the environment
Then this might explain why they find much
ordinary consumption unsatisfying
• 2. Aggrandizing the ego by accumulating
more and more wealth so that you can
consume more and more just distances
you from other people and from the
objects of consumption themselves.
• The more you have, the more your ego
gets inflated, and the more you have to
feed it to keep it happy.
•
And the more things you have, the more
difficult it is to focus on one
Finally
3. You can’t buy
nirvana
How do you get there?
1. Zazen
2. Koans
3. The noble eightfold path
Focus on koans here
The koan
• Initially from the Chinese kung-an = public case,
•
used in medieval Chinese jurisprudence
• The literal meaning is the “table” or “bench” (an) of
•
a “magistrate” or “judge” (kung).
• The most famous is “The sound of one hand”
• There is a huge literature about the meaning of
particular koans,
• No interpretation is correct –it depends on the
monastery
There are 2 opposing views :
1. They are meaningless, designed to stop you from
thinking by driving you nuts (eg Suzuki). You repeat
and repeat the koan to yourself, asking what it
means, but it has no meaning. And so the mind
becomes paralyzed in some sense, and deeper
powers take over from the intellect.
2. They have a rational interpretation
I will go for the second…
A simple rational framework
• The idea is that koan can often be interpreted in
terms of no mind or “nondualism”
• The insight into the koan often involves a poetic
way of realizing this, of seeing something from a
new angle which reinforces the idea of the world
as one.
• It goes without saying that the interpretations
which follow are too simple to satisfy any Zen
roshi. But they might be useful for Adam Smith.
Once Te Shan came to visit Master Lung T’an asking
for instructions, and stayed there til the night
settled in.
T’an said: ‘The night has advanced. Why don’t you
retire and repose?
Shan made a deep bow, lifted the blind, and went
out. But it was all darkness outside. He came back
and told the Master that it was utterly dark out
there.
T’an lit a candle and handed it to him. Shan was
about to take it, when all of a sudden T’an blew the
light out.
On the spot, Shan attained enlightenment.
At Zen Master Nansen's place
one day the monks of the east
and west halls were arguing
about a cat. Seeing this,
Nansen held up the cat
saying, "If you can say a word,
I won't cut it in two." The
assembly made no response.
Nansen cut the cat.
• The assembly is divided: they are two, not one. Zen
Master Nansen, as leader of the monastery, had to
confront the problem directly to save the
community from itself.
• Nansen is saying “if you can be one I will not cut the
cat in two.” Possibly both sides love the cat. At any
rate, they certainly do not want to see it killed.
• But the assembly cannot unite. So he cuts the cat in
two.
• Are there now two cats? No. For the cat to live, it
must be one. The same goes for the assembly.
The master of Kennin temple was Mokurai, Silent Thunder.
He had a little protege named Toyo who was only twelve
years old. Toyo saw the older disciples visit the master's
room each morning and evening to receive in which they
were given koan to stop mind-wandering.
Toyo wished to do sanzen also.
"Wait a while," said Mokurai. "You are too young."
But the child insisted, so the teacher finally consented.
• "You can hear the sound of two hands when
they clap together," said Mokurai. "Now show
me the sound of one hand."
Toyo bowed and went to his room to consider this
problem. From his window he could hear the music of
the geishas. "Ah, I have it!" he proclaimed.
The next evening, when his teacher asked him to
illustrate the sound of one hand, Toyo began to play the
music of the geishas.
"No, no," said Mokurai. "That will never do. That is not
the sound of one hand. You've not got it at all."
……He heard the cry of an owl. This also was
refused.
The sound of one hand was not the locusts.
For more than ten times Toyo visited Mokurai with
different sounds. All were wrong…..
At last little Toyo entered true meditation and
transcended all sounds. "I could collect no more,"
he explained later, "so I reached the soundless
sound.”
Toyo had realized the sound of one hand.
John Cage’s 4”33’ performed at
Barbican Hall, London
http://www.youtube.com/watch?v=hU
Jagb7hL0E
Many other interpretations are possible, and, as we have
seen, no interpretation is correct. Here is what
the inventor of the koan, the 17th c Japanese Zen Master
Hakuin says:
When the (Sound of the ) Single Hand enters the ear
to even the slightest degree, the sound of the Buddha,
the sound of the gods, the sound of the
boddhisattvas, sravakas, pratyyeka-buddhas,
hungry ghosts, fighting demons, the sound of beasts,
of heaven and of hell, all sounds existing in this world,
are heard without exception…”
This agrees with the framework I have suggested:
• The sound of one hand
clapping is the sound of the
universe clapping. Everyone and
everything are clapping…
…The universe is one.
Can you hear it?
Be careful: the sound
can be deafening…
Everything and Nothing
•
•
•
•
So the sound of one hand clapping is both
Silence
and
The loudest sound imaginable.
What might Adam Smith
say
to the Buddha?
Enlightenment
n
What is enlightenment?
Adam Smith
•
Enlightenment consists in
the application of reason
to solve society’s problems
The secret of the wealth of nations can
be seen in the humble pin factory
• One key to making a society wealthy is the division
of labor.
• Productivity rises because of repetition
• But, as Smith also said, the division of labor
builds narrowness of interest, lack of wisdom:
“The minds of men are “contracted
• And of course…what is now referred to as the
fundamental theorem of welfare economics:
Under certain circumstances, selfishness is good
for society
What is
enlightenment?
The Buddha:
Enlightenment is an individual
matter,and means liberation,
freedom from desire
In Buddhism, repetition of
koans and sutras itself builds
consciousness of
interdependence and wisdom,
leads to mystical insight or
“expanded” awareness
Repetition and wisdom
• 1. It is interesting that both kinds of enlightenment
are produced through repetition
•
In Smith’s “pin factory” repetition of tasks leads to
gains to productivity via specialization
• But it also means lack of consciousness of
interdependence. Smith favored free public
education to remedy this
Enlightenment as a final state of pure
consciousness?
• 2. Smith might point out that
Enlightenment as a final state of “pure
consciousness” is not logical. The act of
perception is always structured
(Hori, Katz).
n
What would perception be like without
structure? Whirring and buzzing, flashing
lights …
• Even Suzuki and others who talk about the
final state say you have to continue to make
progress after
3. Equilibrium zen.
• The most fundamental idea in economics is that
decisions are made at the margin. A person
compares the benefits of consuming a little bit
more or working a bit more or saving a bit more
n
with its costs
• Is this true of Zen Buddhism?
Is Zen divisible?
But to do this, the activity has to be divisible,
with no increasing returns
Is Zen divisible?
n
If the goal of Zen is enlightenment, and the
state of enlightenment is really fundamentally
different from ordinary life (One is either
enlightened or one is not) Zen Buddhism would
be subject to increasing returns
And there would be a corner solution
But Zen is divisible
• At one extreme there is enlightenment or satori or
kensho. In this, you feel at one with everything all
the time. This is hard to understand.
• But it is easy to understand
n short experiences of
feeling totally satisfied with, say, chopping an
onion.
• A fully “awakened” individual has this experience
more often than others, possibly life is like that all
the time for her. But they are the same experiences,
it seems to me.
Zen is divisible
At the other end of the spectrum is
something recently christened “micro
mindfulness”. You can do a moment’s
zazen, once you have trained yourself to do
it.
n
In between are all possible levels of Zen
oneness. You can have a little, or a lot.
Equilibrium Zen: The Middle Way
With both consumption and zen Buddhism
subject to diminishing or at least not increasing
returns, we can apply the standard marginal
analysis: an individual behaves as if he
n
equated the marginal benefits
of zazen or
koan study or other zen –related activity to its
marginal costs in terms of consumption
foregone
• Zen Buddhism is very time intensive. Time is
fixed. But income is variable. So as income
and consumption rise, MUZB/MUC necessarily
increases and consumption is less and less
satisfying relative to ZB
• The accumulation of goods also makes it
difficult to be one with what you have…
So Adam Smith
and the Buddha
agree
4. You can’t buy
nirvana
Optimal Zen
Will people choose the right amount of
zen from the social point of view?
Does the choice of zen result in
externalities?
5. Economics and Buddhist
management
• Japanese firms were the first to adopt ideas
originated by the American Edward Deming
with the adoption of practises like quality
circles, zero defects,
• Buddhist-like behavior within organizations eg
iron discipline, attention to quality, can raise
productivity.
• Promotion of identification with the firm can
raise productivity (Akerlof and Kranton model
this: the firm can internalize these
externalities)
6 Externalities of religious Zen
groups on the rest of society
Should be POSITIVE for environment (though
there is nothing great about the Japanese record,
Bhutan may be better, orn7not)
But NEGATIVE for war (because of discipline)
Record of Buddhist groups during WW2 not good,
see Brian Victoria, Zen at War.
It depends on what you kensho….
But everything is interdependent!
When the nun Chiyono studied Zen under Bukko of
Engaku she was unable to attain the fruits of
meditation for a long time.
At last one moonlit night she was carrying water in
an old pail bound with bamboo. The bamboo broke
n7
and the bottom fell out of the pail, and at that
moment Chiyono was set free!
7. Coase and Interdependence
• Why did she attain enlightenment? Because she
realized the interdependence of everything.
•
Just like Coase: A railroad
emits sparks onto a
n7
neighbouring farm: Who should be liable?
Answer: There is no causation: Everything is
interdependent.
• So why not subsidize the environment directly?
Should trees have standing? Should pit
bulls have representation?
• Coase theorem only
works if all parties have property rights.
• Could the idea that “trees
should have standing” be a
completion of Coase?
• What about dogs? Kno, the dog
attacked a 5 year old child, the
Georgia Supreme Court appointed
a lawyer for him
• As long as the environment itself
has no independent value (ie apart from its value to
humans) it will continue
to be destroyed.
Conclusion
• There is a logic to Zen Buddhism. It is
different from Economic logic, and different
from ordinary logic. It is the logic of
nonduality, of seeing the one in the many and
the many in the one.
• A person can acquire this ability, just as one
can acquire the ability to use economic logic
• Applied to oneself, this is the ability to lose
yourself. The moment you gain that capacity
is the moment of (initial) enlightenment.
Summary of Propositions
• 1. Zen can be rational: To lose yourself is
better than to gratify yourself
• 2. In Zen, you focus on the present but
not on consumption. These two things
are the same in economics but not in
Buddhism.
• 3. Too much inequality is bad for the rich
as well as the poor
• 4. You can’t buy nirvana
• 5. The middle way--- zen is divisible, there is no final
enlightenment, there is an equilibrium level of Zen
• 6. Education and mindfulness (instead of ritalin for
ADD) should be subsidized, but not Buddhism
• 7. Optimal Zen 1: Buddhist-like behavior within
organizations eg iron discipline, attention to quality,
identification with the firm can raise productivity.
• 8. Optimal Zen 2 Coase: Everything is
interdependent. You can subsidize the environment
instead of Buddhism. BUT maybe Trees and Pit
Bulls should have rights
THE END